Plan ahead for a stress-free holiday season

I can’t believe it’s almost December. In just over a month retail businesses will be completely swamped...and my business will be a ghost town.

If you are in the world of retail, where everyone pays you before they leave the can safely skip this post. This information is for those of us who provide services and who spend time chasing down payments throughout the year.

This is a very tricky time of year. The holidays usually demand a large monetary sacrifice, so we want to bring in as much money as possible. We also roll into December completely exhausted, and want nothing more than to take some time off.

I made a big mistake for many years. I like to be able to take time off with a clear conscience. That means I like to wrap up as many projects as possible before I go. I also wanted to do a big burst of work so I could send out a few last minute invoices to cover the extra costs. I would give myself a deadline like the 15th. Then, in an unsettling display of mania I would work day and night to get project after project wrapped up. By the time I was clicking send on my invoices, my hands would be gnarled claws, shaking and twitching from the caffeine overdose. It was not a pretty sight, but I got it done!

Guess what happened next? Nothing. And do we know why? Because who pays for invoices a week before Christmas? Nobody, that’s who.

What lessons can you take from my failures?

Know your clients.

If you’re counting on some last minute revenue to help cover your holidays, you need to know if this is possible. If you work with clients who typically pay in Net 30 or Net 45, don’t send out an invoice on December 15th and expect to see any funds before the New Year.

Also, if your bigger clients are taking time off, make sure you wrap things up and invoice them at least a week before they leave. I don’t know your clients, but any mail I get after December 15th that isn’t a package or a Christmas card is getting ignored until after the holidays.

Tackle your receivables.

Take a minute to review your outstanding invoices. This is something you should review on the 1st of every month, but do it as early as possible this time.

Reach out to all your clients with past-due balances right away. If any of them are working with a limited budget, you’re going to want to be the first person they hear from.

Finally, here are two more tips. One for this year, and one for the future.


If you’ve done your work and followed up on your receivables...there’s not much more you can do. Make the most with what you’ve got and really enjoy the time off. Running your own business means holidays are rare. If you get a chance to take a few days off this year enjoy every minute of it.

Learn from your mistakes.

Take some time in the New Year to review 2014 thoroughly. As it pertains to this post, review your cash flow for November/December. If possible, pull up similar reports for 2013 and 2012. Are there any obvious patterns? Did cash flow stop on a certain date? Did your clients pay less or slower than usual? Take these facts into consideration when budgeting for the 2015 holiday season.

What about you?

How do you handle the holidays? Do you take time off? Do you have a hard time collecting payments? Let me know in the comments.

Let Xero Supercharge your bank reconciliation

The trouble with trying to pick a "favourite" cloud-based bookkeeping service is that they all have unique things that make them stand out.

In Xero, at least for me, their standout feature is bank rules. Most services will automatically pull down bank transactions. Some of them will even "learn" how to categorize some of your transactions over time. Xero's implementation is my favourite.

Xero lets you create rules. These rules let you auto-categorize transactions as they come in based on several criteria. Instead of trying to explain it all by text, let me show you.

Here's a transaction that was downloaded from my PayPal account.

xero bank reconciliation

As you can see, Xero pulled down the date, the payee (PayPal), the description (Fee), and the amount ($9.22). PayPal fees are a common transaction in this account. Instead of having to manually categorize these each time, let's create a rule.

Click on the "Create rule" button at the top right of the transaction details. That will bring you to the Bank Rules screen. It's so powerful, I can't get you a screenshot that covers the full set of options. There are 7 different sections to each rule. Here are the first 4.

xero bank rules

xero bank rules 2

1.. The first part is the "IF" in a typical IF/THEN statement. This covers all the criteria your bank will provide that Xero can use to categorize the transaction. Some of these are going to be the same each time...others are specific to the individual transaction. I can't tell you how to handle each of yours, but I'll use this PayPal transaction as an example.

What you see above is what Xero filled in. We're going to change this a bit.

  • Let's keep the Payee equals PayPal.
  • We'll remove the Reference equals. That will be different each time.
  • We can also keep the Description equals Fee.

What this means is that anytime a transaction from "PayPal" shows up with "Fee" in the description it will trigger the next parts of the rule.

2.. You've got 3 choices on how to set the payee.
* The payee from #1 will be used.
* You can select a payee or create a new one.
* You can opt to wait and fill it in during reconciliation.

3.. You can skip this step unless the transaction is for an asset purchase.

4.. This is where you set the category. In this example we're just going to put "Merchant Fees" in the Account field, and leave the rest as is.

5.. You can leave this setting as is, unless you want to fill in the reference during reconciliation.

6.. In this example we're going to keep this as PayPal. However, if you're setting up a rule for a transaction that happens across multiple accounts, you can change this to "all bank accounts".

7.. Finally, we need to give the rule a name. PayPal is fine, but since there might be more than 1 rule associated with PayPal, something like PayPal Fees might be more appropriate. Click Save.

And that's it. Here's what you'll see once you've saved it.

xero bank rules 3

Now let's go back to the bank rec screen and see what it looks like.

xero bank reconciliation 2

See the difference? Now, instead of having to fill in each value, Xero just asks you if you want to apply the PayPal Fees rule. All you have to do for any future PayPal fee is click OK and it gets properly categorized.

Final tip:

The way Xero categorizes the info from the bank accounts can vary. For example, sometimes the "description" from a bank transaction gets placed in the "Description" field; other times it gets placed in "Reference". You can edit this in the bank import settings (maybe I'll cover this in another post), but there's a way to cover your bases here.

In #1, click on the dropdown menu that shows "Description". Instead, select "Any text field". Now the rule will still run even if the description was saved to the "Reference" field instead.

Happy reconciling!

Should bookkeepers be certified?


I know I have mentioned this at least 153 times…but I’m Canadian. And, as a Canadian, we bookkeepers don’t require any type of official certification in order to start working. Sadly, you probably don’t even need to know how to spell bookkeeper before you start charging people to do their books. Let’s not forget the fact that I was hired as a bookkeeping clerk before I was old enough to drive.

I suppose that’s true in a lot of professions. I don’t think most people ask for a list of academic achievements from their plumber while the broken pipe continues to fill their basement with water. They have a need, they find someone who seems to fit the bill, and the subsequent work (if done correctly) becomes their certification.

That doesn’t mean there aren’t ways to become certified as a bookkeeper in this oft frozen tundra I call home; or to receive other types of designations that can help prove your worth. I haven’t done exhaustive research, but I know of a couple different sites where I can sign up, take some tests, and become a “certified professional bookkeeper”.

IPBC (Institute of Professional Bookkeepers of Canada) - As of the date of this writing they've got a promotion on where you can become a member and pay for your certification test for $395.00. That covers your exam and the first year of membership. It appears that it's $295/year afterward to maintain your membership.

The certification process requires you to complete a 2-hour exam. You receive prep materials with your membership. In order to qualify for the membership and test you need a letter of recommendation from a client/employer showing you've been employed as a bookkeeper for at least 2 years. Once you've proved this, you take the exam at a local Academy of Learning (or similar). The test is online, and you need at least 75% to pass.

CIB (Canadian Institute of Bookkeeping) - The certification process is quite a bit different than with the IPBC. The yearly membership itself is based on how long you've been in the field. If you're new you'd be a Student Member ($156/yr). Associate Members ($192/yr) have been bookkeepers for at least 5 years but have not yet completed the certification courses. Finally Certified Bookkeepers ($240/yr) have at least 3 years of bookkeeping experience and have completed the required courses.

Unlike the IPBC's certification, this one requires the completion of 9 college-level classes. These can be taken online or at your local college...just depending on availability. Enrollment in the program is $50. Once you are enrolled you have 5 years to complete the classes. Registration for each class is $30 ($40 if you're not a member). If you sign up as an Associate Member (5+ years experience) you may be eligible for up to 4 course exemptions, so you might only need to take 5 courses if you've been working for a while. It seems like the registration fee is in addition to the actual cost of taking the course.

So, why bother?

This one's a bit tricky. In most professions getting a certificate or degree usually comes with more specific benefits. Become a journeyman electrician and you are safe in assuming your hourly rate just went up. On the other side, see how many hospitals hire you on as an ER doctor with "I've seen every episode of House" as your list of qualifications.

The immediate benefits of being a certified bookkeeper aren't as obvious.

Both sites have their list of benefits. They both offer discounts with businesses they have partnered with. They also indicate you should be able to increase your rate of pay because of your certification. That’s a very interesting idea, and on some levels I can definitely see it. I know if I was going to start paying up to $300/yr to be a member of one of these organizations, I’d want to be able to see a return on that investment.

I guess the part that I’m struggling with is how different both paths are…because they both get you to the same certification. I can spend $400, some time studying, and 2 hours taking a test to get my certification. Or...I can spend $200, then $50 to enrol, $30x9 for registration, then __x9 for whatever the college actually charges for each course, then spend however long it will take to complete 9 college courses, pass a test, and get the same certification. Am I missing something? Perhaps there's something my self-taught brain is too small to process that allows this to make sense. At the moment it feels the same as if doctor's were given the option to either spend the better part of a decade in school OR 6 months at night school to get the same PhD.

Conceptually I really like the idea. I have either taught myself or learned on the job about 99% of the skills I've obtained since I turned 19. I am a huge fan of learning sites like, and at least 75% of the written words I consume are instructional in nature. So, the idea of learning a bit more about my profession AND getting to add a proper certification to my resume is very enticing.

Other options

There are also smaller, more targeted types of certification. These are usually app specific, and sometimes have different levels of certification. Being a bookkeeper usually gives me access to an accountant/bookkeeper specific version of all of my bookkeeping software. Here are a couple of the ones I'm part of:

QuickBooks - If you're a bookkeeper and you use QuickBooks, you're most likely signed up with their ProAdvisor program. Being a ProAdvisor on its own requires nothing more than paying to join. It's either a monthly or yearly fee. It used to include a copy of the desktop software, which is why I signed up. Now, since QB is (at least based on their marketing) determined to get you away from their desktop software and onto QuickBooks Online, there are ProAdvisor memberships that are free but don't include any software.

In Canada, you can also become a Certified ProAdvisor. You take an exam and, if you pass, you become certified. The US ProAdvisor program has 6 different certifications. You can get certified in QB Online, Desktop, Enterprise Solutions, Point of Sale, and Advanced. These are all separate tests and give you different certificates. All of these tests are included in the cost of your membership.

FreshBooks - With FreshBooks, I am part of their FreshBooks Accountant Network. This actually means I get to show off my FreshBooks Certified Accountant badge. Unfortunately just because FreshBooks calls me an accountant doesn't let me charge accountant rates. If only, right? They recently added a really nice Accountant Center that lets me get reports for all my FreshBooks-using clients in one central hub.

How about you?

First off, I'd love to hear from other bookkeepers here. Are you certified? Do you plan to? Let me know why you've decided to join (or not join) a professional group like the ones I listed.

For the rest of you, tell me about your experiences. Does your industry offer similar certifications? If so, what made you decide to get (or not get) certified?

I look forward to hearing your opinions.

Hourly or Flat Rate: How to Charge For Your Time

One of my favourite readers, and former guest poster Irvin emailed me recently. He suggested I write a post about how I charge for my services. It was a great idea, so here we are.

Maybe I'm alone here, but I find this to be a very painful topic. Just charging money in general is painful for us introverts. Asking for raises back in my employee days was excruciating, and that was (at most) once a year. After that, I'd just submit my hours and get paid. So, apparently my brilliant idea was to go out on my own...where I'd have to ask for money each and every month. And, if I want to increase my rates, I get to "ask" dozens of people instead of just one boss. Great idea Eric!!

I won't go down the rabbit hole of "how much should I charge". That's its own painful topic, so let's just tear off one bandaid at a time.

Today we'll talk about hourly vs. flat rate pricing. We'll go through some pros and cons of each, and I'll tell you a bit about my experiences with both over my career.


I think I've mentioned this before, but I got paid $4/hour at my first bookkeeping job. To add insult to injury, I got paid $5/hour to clean the office over the weekend. For the majority of my bookkeeping career, I haven't had to set my rate or decide between hourly or flat rate. I would get hired for a job, they'd spell out the terms, and I'd either take the job or not. Over the years it's been a pretty even split. Sometimes I'd get paid by the hour and other times they'd have $x/month allocated to that department. This was true when I was an employee and when I was a subcontractor.


2010 was quite the year. In December 2009 I had a full time job in an office and a few smaller clients I took care of on the side. After the Christmas holidays were done the business I had managed was closed down. I was now working from home with only those few smaller clients, and no idea where to go next.

One of the big struggles was (and still is) how (and how much) I would charge for my services. I think the biggest hurdle in this generation is the amount of competition. Back before my business was online, I only had to figure out what the handful of bookkeepers in my city were doing. Maybe one was charging as little as $20/hr and another was as high as $50/hr. I would figure out where I fit within that group and charge accordingly.

Suddenly in 2010 I had people on oDesk charging $5/hr and accounting firms charging $100/hr for (at least on paper) the same services. Other sites were offering tiered flat monthly rates with comparison graphics like the ones you'd see when trying to decide which version of Office you were going to buy.

How the heck am I supposed to decide now? I had a hard enough time charging $25/hr when I knew someone in the same city was charging $20/hr...even if I knew I was more experienced. Now I had to compete with $5/hr and the $250/m "Bronze Package". Ugh.


In this scenario, you are literally getting paid for your time. You keep track of how many billable hours you work for a client each month and charge for those hours x your hourly rate. Once you know how much money you need to make each month, you either divide it by how many hours you can work to determine your hourly rate, or divide it by your hourly rate to determine how many billable hours you have to work each month.

Pros: For me, I know I'm getting paid for the work I did. For the client, they know exactly how much time you're spending on each aspect of the work.
Cons: For me, over time, I'm going to get paid less if I find ways to be more efficient. For both of us, the total invoice each month is going to fluctuate so it's hard to budget for these amounts. I could get stuck without any revenue one month, or they could get a big surprise one month if I had extra work to complete.
Opinion: I like this method when getting started with a new client because it's impossible to know how much time a job will take you until you're in it. Once I've spent some time in their books I usually like to transition to the next method.

Flat rate

In this scenario, you establish a flat rate. This can be a flat rate per job or a flat monthly fee or minimum retainer that gets charged every month, regardless of how much work actually gets done.

Pros: The big pro for both sides is consistency. I know the minimum amount I'm making each month, and the client knows how much my services will cost. It also provides an incentive for me to improve efficiencies. If I can deliver the same quality of service in less time, this is a great way for me to increase my hourly rate without charging the client more money.
Cons: The big con here is getting the numbers wrong. If I set my prices too low, I'm constantly working for a reduced rate. Set them too high, and the client feels bad about the value they're receiving. If the work fluctuates greatly month to month, this can create a constant renegotiating which is what I wanted to avoid in the first place.
Opinion: I like this method for my established clients who have very similar needs month to month. Hopefully I have set the prices correctly based on my discoveries while initially billing by the hour. Finding the right flat rate is one of those skills that you improve over time.

Why is this so hard to figure out?

It’s hard because it’s not consistent like when you’re an employee. As an employee it’s easy to agree on an hourly rate because you usually know the # of hours you’ll work each month. Plus, employees don’t have billable and unbillable hours. If they’re at work for 8 hours, that’s what they get paid for. As a business owner, the amount of hours I get paid for each day varies. Some days I’ll spend 8 hours working on client projects that are completely billable. Other days I’ll be running errands, writing blog posts, and doing my own bookkeeping. Those days I might not generate any billable hours.

I love the "look" of tiered pricing. I have seen quite a few bookkeeping sites that offer something similar to "Bronze", "Silver", and "Gold" packages. That's such a clean, simple way to price your services...on the surface. Here's an example of the Bronze package. This is completely made up, but loosely based on what I've seen.

Bronze Package - $250/month - includes:
* reconcile 1 bank account
* AR and AP tracking
* basic financial reports
* payroll for up to 2 employees

I like the simplicity. A potential client can choose your services like they’d choose a combo at a drive thru.

There are some issues though. With this example, do you limit the # of transactions? I have clients who have 10 transactions running through their account each month, and others who can have more than 300 transactions each month. That's a big change in workload. Do you set transaction limits in your tiers? How do you charge for overages? What if those 10 transactions require 5 phone calls to get clarifications from your client? Do you charge extra for the back and forth?


After all these years I still don’t have one good answer that will fit everyone’s situation. I don’t think there is one. Here are some suggestions I have, which will include tips specific to fellow bookkeepers.

  • Get in the habit of tracking your time. You can use apps like RescueTime that track this in the background, but either way track how much time you’re spending on all of your daily tasks. The more you know the better you can estimate future projects.
  • Figure out flat rates for small, short term projects. For bookkeepers, this could cover things like tax returns, training, setting up software, and basic reporting.
  • Charge by the hour for at least the first month for new long term clients. You can’t know how complex a project will be until you get started. Most business owners don’t know how long they spend doing their own books, so the estimates they give you are rarely accurate. Plus, the work they’re doing might not be the same as the work you need to do. Get to know their system and then (optionally) quote them a flat monthly rate going forward.
  • Base your monthly rate on the full year. Don’t forget about the extra work you’ll be doing during busier seasons. For bookkeepers, don’t forget about year end, quarterly reports, and tax filings throughout the year. Add up the hours you think you’ll work in a full year, and then split that up over 12 months.
  • Be very clear about what work is included in your rate. If you are presented with work that will be outside the scope of your regular fee be upfront about potential overages and get the clients approval before proceeding.
  • Give yourself a bit of breathing room with your rate. If you set your prices too low you won’t have time for small surprises that will (and they will) come up. Think about your cellphone bill. People would rather pay for a bit more data than they need than paying the bare minimum and then constantly getting charged overages.

As you might have figured out from the sheer volume of this post, it’s a topic I spend a lot of time thinking about. Based on my research with fellow bookkeepers, there isn’t one (or two, or three) answer either.

What about you? If you are a bookkeeper, or anyone who charges for their time, how do you do it? I’d love to hear your opinions. What’s worked, what hasn’t, and what does your ideal system look like?